VARs cautiously optimistic about 2007

Posted on January 05, 2007

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By Dave Simpson

—According to a server-storage reseller survey conducted by Robert W. Baird & Co., VARs ended 2006 on a relatively high note and are somewhat optimistic about revenue growth in 2007. For example, on a revenue-weighted basis, about half (52%) of the survey respondents predict that Q1 2007 will be more positive than normal seasonality would suggest. However, Baird analysts note that these results are slightly less optimistic than in prior surveys.

With respect to 2007, approximately 80% of the resellers expect enterprise spending on servers and storage to increase between 5% and 15% relative to 2006.

In Q4 2006, 29% of the VARs were "above plan," 54% were "on plan," and the remaining 17% were "below" plan in terms of server/storage-related revenues. Most resellers indicated that pricing pressure eased in the fourth quarter relative to Q3.

The Baird reseller surveys also query VARs about the relative revenue performance of the leading storage vendors. In the most recent survey, the storage vendors included Network Appliance, Hewlett-Packard, EMC, QLogic, Emulex, Brocade/McData, and Dell.

Network Appliance came out on top, with about two-thirds of the resellers expecting NetApp-related revenues to increase in the first quarter as well as over the entire year. Baird analysts note that NetApp's good fortune in the channel is at least in part related to its reseller relationship with IBM and IBM's channel partners.

Approximately half of the VARs report that EMC's market position is improving, and many VARs report a ramp-up in end-user interest in encryption technology—an area in which EMC may have an edge over other storage vendors due to its acquisition of RSA.

In the Baird survey, the only storage vendor that received generally negative marks was Dell (which was also the case in previous Baird channel surveys), although Baird analysts note that Dell's fortunes could improve if the resellers are right about the uptick in overall end-user spending this year.

Originally published on .

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